How to Make More Money From the Money You Already Have (Legally)

Whether you consider yourself a financial rock star or someone who’s still learning the ropes, one fact remains: You can almost always make your money work a little harder for you.

The good news is that you don’t have to have a finance degree to implement some tricks of the trade. As our very own Matt Shapiro, a Certified Financial Planner™ with
LearnVest Planning Services
, puts it: “There are definitely some very easy things you can do on your own right now.”

So we got to thinking about simple tactics that help to maximize our money and, more importantly, how to integrate them into our everyday lives. Here’s Shapiro’s rundown of four easy ways to make your money work harder—minimal effort required.

1. Opt for an Online Savings Account

If you currently have your
emergency fund
parked in a savings account at your local bank, you may want to rethink your approach.

“If you walk into a brick-and-mortar bank, your savings account is generally going to pay you less than a tenth of a percent [in interest], whereas some online banks will offer 1% just for having a savings account,” Shapiro says. Not to mention, having your funds online (where you might have to wait to receive a withdrawal) as opposed to at your neighborhood bank can remove the temptation of dipping into your money at every turn.

To help make the most of this set-up, Shapiro suggests using an online account specifically for an emergency fund or longer-term savings. For money you’d like to keep liquid and accessible, stick to your checking account.

To narrow down which high-yield savings account is best for you, he recommends starting with this handy
interest rate comparison tool
, which highlights real-time rates for some of the highest-yielding accounts available to consumers right now.

2. Tap Into Your Employer’s Pre-Tax Transportation Benefits

Chances are, you’re shelling out some out-of-pocket dollars to cover transportation expenses to and from work. What you may not know is that many companies can help lighten that load.

“If you pay for parking at work or you take public transportation to get to work, a lot of businesses will allow you to take that cost out of your paycheck pre-tax,” Shapiro says, adding that these costs (think metro passes or parking permits) are essentially work expenses. “It’s one of those things that people probably overlook when they’re signing up for their benefits on their second day at their job. If they don’t realize it until five years later, they’ve missed out on five years of a slight tax break.”

To clarify, this doesn’t mean that your employer will cover the cost of your commute—instead, it allows you to avoid paying taxes on your transportation expenses. To see if you’re missing out on this perk, Shapiro advises checking in with your human resources department to see if your company has this kind of offer on the table.

Where tax breaks are concerned, many folks are surprised to learn that commuting to work actually
isn’t
deductible (something a lot of freelancers and contracted employees don’t realize). However, the
IRS does allow
taxpayers to deduct travel expenses if you’re going from your first job to a second job, whether that’s a freelancing gig or a part-time opportunity. Either way, that second chunk of miles is something you can absolutely deduct come tax time.

Translation: Hang onto those receipts! If you’re spending that money anyway, putting it to work to eventually pay less elsewhere is a no-brainer.

3. Understand Where Your Retirement Savings Dollars Are Going

We all know that feeding your
retirement fund
is important, but maximizing the benefits of a retirement savings account doesn’t stop with your employer match. It’s also important to have a basic handle on the mix of assets within your 401K to help ensure your money grows enough to potentially reach your retirement goals.

For example, if your retirement fund is sitting in a money market account earning .01%, ask yourself: Is that type of growth going to help me fund my future retirement lifestyle? If not, you may want to consider investing in equities and other types of investments that could provide greater growth.

Shapiro suggests looking into a
target-date fund
(a type of fund that shifts your mix of stocks, bonds, cash, or other investments as you approach your target retirement date) to start off. Some
analyses from investment research firm Morningstar
have shown that those who take this kind of passive investing approach may see slightly better returns than people who actively manage their portfolios.

Another overlooked opportunity has to do with forgotten-about 401Ks from previous employers. If you leave that cash sitting at your old job, you could be setting yourself up for a potentially big loss.

“Keep track of those old accounts. Maybe this means rolling them over into a new 401K or an IRA, depending on the situation,” Shapiro says. “But if you don’t keep tabs on it, it can be extremely difficult to track that money down, especially if your old employer gets acquired by a new company.”

Also keep in mind that if your balance is under $5,000 or you are older than 62, some plans will automatically distribute the funds to you once you leave your employer. If you forget to deposit the balance into another retirement account within 60 days, you may be hit with taxes and, if you’re younger than 59 1/2, a 10% penalty.

4. Look to Credit Unions for High-Yield Checking Accounts

When it comes to making our money work harder, we don’t often look to our checking accounts. But, according to Shapiro, more and more people are doing just that.

“There are a lot of
credit unions
available to people who work for bigger employers, and many offer high-yield checking accounts,” he says. “What we’re starting to see here and there are credit unions with checking accounts that actually pay a higher interest rate than a savings account.”

Since some of the highest-yield accounts are from credit unions that are tied to employers, you obviously have to be employed by one of those companies to be eligible. You can check with your human resources department to see if they have such a partnership in place.

In Shapiro’s experience, these accounts often limit the funds to, say, $25,000, but also allow people to earn up to 4% interest on their money.

“For this type of return, you usually have to have your paycheck directly deposited into the account and also meet some other qualifications, but it’s definitely worth looking into,” Shapiro says.

To get those higher interest rates, Shapiro adds that there will likely be some other qualifications to meet, which vary from credit union to credit union. Some common restrictions have to do with the number of allowable monthly transactions, balance minimums or maximums and so on. In other words, be sure to read the fine print.

If you do qualify, it represents an easy way to put your money to work.

“You’re going to have a checking account anyway; you might as well earn some interest and have it work for you,” Shapiro says.